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Non profit:register for tax exemption

New legislation provides for the exemption of public benefit organizations carrying out approved public benefit activities. In addition to the tax exemption benefits enjoyed by NPOs, local donors will also benefit. ’An extended category of qualifying public benefit organizations provides the donor with a wider selection of organizations to which tax deductible donations may be made.‘

Non-Profit Organizations urged to register for tax exemption
By Damaria Senne
Non-Profit Partnership
Johannesburg

After a year of waiting, the cash strapped non-profit sector received a boost with the announcement that the Taxation Laws Amendment Act
30 of 2000 takes effect on the 15th of July. The new legislation provides for the exemption of public benefit organizations carrying out approved
public benefit activities. In addition to the tax exemption benefits enjoyed by NPOs, local donors will also benefit. ’An extended category
of qualifying public benefit organizations provides the donor with a wider
selection of organizations to which tax deductible donations may be made, ‘ says Karen Nelson, a senior lobbyist at the Non-Profit
Partnership, an organization whose aim is to strengthen the financial sustainability of the non-profit sector. ‘An extended category of
qualifying public benefit organizations provides the donor with a wider selection of organizations to which tax deductible donations may be made and the donor, no longer limited by legislation to one particular type of organization, is now at liberty to support a cause of its choice.’

‘At long last!’ says Mary Honey, head of the Legal Resource Centre’s NPO Support Project in Cape Town. ‘ We hope that the law achieves its
purpose and extends the ambit of the tax benefits for non-profit organizations (NPOs).’ The announcement was also welcome news to local donors. ‘We’re pleased that the long awaited tax bill has now been legislated,’ says Gail Campbell, head of the ABSA Foundation. ‘Not only will this bring benefits for the non-profit sector, but we also hope that it will encourage increased corporate giving for the community development projects.’

In order to qualify for exemption the public benefit organization must register with the South African Revenue Services and comply with the
following requirements:

· It must be a Section 21 company, a Trust or an
association of persons established in terms of a constitution
· It must submit a copy of its founding statement to the South African Revenue Services (SARS)
· At least three independent and unconnected persons must accept fiduciary responsibilities of the non-profit organisation
· It must invest in certain prescribed investments
· On dissolution, it must transfer its assets to an approved public benefit organization
· It may not accept donations, which are revocable or conditional
· All amendments to the public benefit organization’s founding documents must be submitted to the SARS.
· It may not engage in, or take part in schemes entered into for the reduction, postponement or avoidance of tax
· It may not pay excessive remuneration
· It will be obliged to conform to certain reporting standards
· It must be registered with the Director of Non-Profit Organizations.

‘We would like to urge non-profit organizations to register with the Non Profit Organizations Act through the NPO Directorate in the Department
of Social Development,’ says Penny Dlamini, Training, Lobbying and Research Manager at the NPP. ‘ This is the first step in ensuring that
they benefit from the tax exemption and donor deductibility legislation. We also urge them to share this information with other organizations, so that more organizations can benefit from the legislation.’ The NPP will facilitate several seminars on the subject. ‘We are available to assist organizations with the registration and communicating what the legislation is all about,’ Dlamini says. ‘The first presentation will be on
the 12th September 2001 in Cape Town.’

For more information about the Taxation Laws Amendment Act 30 of 2000, please contact Penny
Dlamini at the NPP at (011) 339-1139 or email her at
[email protected]

For more information regarding this article, please email me at this
address or telephone me at the Non-Profit Partnership. Contact details
are provided below.

Sincerely
Damaria Senne
Communications Manager
Non Profit Partnership
PO Box 31819
Braamfontein
Tel: 011 339 1136
Fax: 011 339 1153
E-mail: [email protected]